Leadsinger, Inc. v. BMG Music Publishing ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
LEADSINGER, INC., 
Plaintiff-Appellant,
v.
BMG MUSIC PUBLISHING, a division No. 06-55102
of Bertelsmann, e/s/a BMG Songs,
Inc., e/s/a Careers-BMG Music  D.C. No.
CV-04-08099-VAP
Publishing, Inc.; BMG SONGS,
INC.; CAREERS-BMG PUBLISHING, OPINION
INC.; ZOMBA ENTERPRISES, INC.,
e/s/a Zomba Songs, Inc.; ZOMBA
SONGS, INC.,
Defendants-Appellees.

Appeal from the United States District Court
for the Central District of California
Virginia A. Phillips, District Judge, Presiding
Argued and Submitted
October 18, 2007—Pasadena, California
Filed January 2, 2008
Before: Diarmuid F. O’Scannlain and Milan D. Smith, Jr.,
Circuit Judges, and Michael W. Mosman,* District Judge.
Opinion by Judge Milan D. Smith, Jr.
*The Honorable Michael W. Mosman, United States District Judge for
the District of Oregon, sitting by designation.
1
4 LEADSINGER, INC. v. BMG MUSIC PUBLISHING
COUNSEL
Anthony H. Handal, Brown Rudnick Berlack Israels LLP,
New York, New York, for the plaintiff-appellant.
Karen R. Thorland, Loeb & Loeb LLP, Los Angeles, Califor-
nia, for the defendants-appellees.
OPINION
MILAN D. SMITH, JR., Circuit Judge:
This case requires us to determine how the Copyright Act,
17 U.S.C. §§ 101-1332, applies to karaoke devices that enable
individuals to sing along to recordings of musical composi-
tions, which is a matter of first impression in this circuit. In
the district court, Plaintiff-Appellant Leadsinger, Inc., a
karaoke device manufacturer, filed a complaint for declara-
tory judgment against music publishers, Defendants-
Appellees BMG Music Publishing and Zomba Enterprises,
Inc. (“BMG”). Leadsinger sought a declaration that it is enti-
tled to print or display song lyrics in real time with song
recordings as long as it obtains a compulsory mechanical
license under 17 U.S.C. § 115, or that it is entitled to do so
under the fair use doctrine, 17 U.S.C. § 107. The district court
dismissed the complaint without leave to amend for failure to
state a claim. We affirm.
LEADSINGER, INC. v. BMG MUSIC PUBLISHING 5
I. FACTUAL AND PROCEDURAL BACKGROUND
Karaoke devices necessarily involve copyrighted works
because both musical compositions and their accompanying
song lyrics are essential to their operation. BMG owns or
administers copyrights in musical compositions and through
its licensing agent, the Harry Fox Agency, has issued to Lead-
singer compulsory mechanical licenses to copyrighted musi-
cal compositions under § 115 of the Copyright Act. In addi-
tion to the mechanical fee required to secure a compulsory
license, BMG has demanded that Leadsinger and other
karaoke companies pay a “lyric reprint” fee and a “synchroni-
zation fee.” Leadsinger has refused to pay these additional
fees and filed for declaratory judgment to resolve whether it
has the right to visually display song lyrics in real time with
song recordings, as well as print song lyrics, without holding
anything more than the § 115 compulsory licenses it already
possesses.
In its complaint, Leadsinger describes the karaoke device it
manufactures as “an all-in-one microphone player” that has
recorded songs imbedded in a microchip in the microphone.
When the microphone is plugged into a television, the lyrics
of the song appear on the television screen in real time as the
song is playing, enabling the consumer to sing along with the
lyrics. Though most karaoke companies put their recordings
on cassettes, compact discs, or use a compact disc + graphic
(“CD+G”) or DVD format, these other karaoke devices, much
like Leadsinger’s, display lyrics visually when played in a
device that is connected to a television.
Leadsinger’s device sometimes displays licensed reproduc-
tions of still photographs as a background for the onscreen
lyrics. And, on occasion, Leadsinger includes with the device
a printed copy of the lyrics to the songs recorded on the
microchip. According to Leadsinger’s complaint, the purpose
of both the printed and visually displayed song lyrics is to “fa-
cilitate the customer’s ability to read the lyrics and/or sing
6 LEADSINGER, INC. v. BMG MUSIC PUBLISHING
along with the recorded music.” Leadsinger further claims
that both in and outside the karaoke context, the inclusion of
printed lyrics assists buyers in understanding song lyrics and
enables parents to control “the lyrical content that children are
exposed to.”
The district court concluded that a § 115 compulsory
license does not grant Leadsinger the right to display visual
images and lyrics in real time with music, and that the allega-
tions in Leadsinger’s complaint do not support its fair use
claim. Leadsinger, Inc. v. BMG Music Publ’g, 429 F. Supp.
2d 1190, 1193-97 (C.D. Cal. 2005). The district court dis-
missed Leadsinger’s complaint without leave to amend, con-
cluding that amendment would be futile. Id. at 1197. This
appeal followed.
II. STANDARD OF REVIEW AND JURISDICTION
We review a district court’s grant of a motion to dismiss de
novo. Silvers v. Sony Pictures Entm’t, Inc., 402 F.3d 881, 883
(9th Cir. 2005) (citation omitted). Dismissal for failure to
state a claim is proper only “if it appears beyond doubt” that
the non-moving party “can prove no set of facts which would
entitle him to relief.” Vazquez v. L.A. County, 487 F.3d 1246,
1249 (9th Cir. 2007) (internal quotations and citation omit-
ted). In making this determination, we accept all allegations
of fact as true and construe the complaint in the light most
favorable to the non-moving party. Id. We have jurisdiction
under 28 U.S.C. § 1291.
III. DISCUSSION
A. The Copyright Act
[1] In deciding whether the district court properly dis-
missed Leadsinger’s complaint, we are guided by the lan-
guage of the Copyright Act. Section 102 of the Copyright Act
extends copyright protection to, among other original works
LEADSINGER, INC. v. BMG MUSIC PUBLISHING 7
of authorship, literary works, musical works (including any
accompanying words), and sound recordings. 17 U.S.C.
§ 102. Though 17 U.S.C. § 106 grants copyright owners the
exclusive right to reproduce copyrighted works “in copies or
phonorecords” and to “distribute copies or phonorecords of
the copyrighted work to the public by sale,” 17 U.S.C. § 115limits copyright owners’ exclusive rights with respect to pho-
norecords.
[2] Phonorecords are defined as:
[M]aterial objects in which sounds, other than those
accompanying a motion picture or other audiovisual
work, are fixed by any method now known or later
developed, and from which the sounds can be per-
ceived, reproduced, or otherwise communicated,
either directly or with the aid of a machine or device.
The term “phonorecords” includes the material
object in which the sounds are first fixed.
17 U.S.C. § 101 (emphasis added). Section 115 subjects pho-
norecords to a compulsory licensing scheme that authorizes
any person who complies with its provisions to obtain a
license to make and distribute phonorecords of a nondramatic
musical work if: (1) the work has “been distributed to the
public in the United States under the authority of the copy-
right owner”; and (2) the person’s “primary purpose in mak-
ing phonorecords is to distribute them to the public for private
use.” Id. § 115(a)(1). As the definition of phonorecords indi-
cates, audiovisual works are not phonorecords. See id. § 101.
Thus, § 115’s compulsory licensing scheme does not apply to
audiovisual works.
[3] The Copyright Act defines audiovisual works as:
[W]orks that consist of a series of related images
which are intrinsically intended to be shown by the
use of machines, or devices such as projectors, view-
8 LEADSINGER, INC. v. BMG MUSIC PUBLISHING
ers, or electronic equipment, together with accompa-
nying sounds, if any, regardless of the nature of the
material objects, such as films or tapes, in which the
works are embodied.
Id.; see 1 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 2.09[A] (2007) [hereinafter Nimmer on Copy-
right]. Though it is not explicit in the Copyright Act, courts
have recognized a copyright holder’s right to control the syn-
chronization of musical compositions with the content of
audiovisual works and have required parties to obtain syn-
chronization licenses from copyright holders. See Maljack
Prods., Inc. v. Goodtimes Home Video Corp., 81 F.3d 881,
884-85 (9th Cir. 1996) (recognizing the concept of synchroni-
zation rights); ABKCO Music, Inc. v. Stellar Records, Inc., 96
F.3d 60, 63 n.4 (2d Cir. 1996) (“A synchronization license is
required if a copyrighted musical composition is to be used in
‘timed-relation’ or synchronization with an audiovisual
work.”) (citation omitted); see also 6 Nimmer on Copyright
§ 30.02[F][3] (“A license is necessary if an existing musical
composition is to be used in synchronization or ‘timed-
relation’ with an audiovisual work.”).
[4] The Copyright Act defines literary works as “works,
other than audiovisual works, expressed in words, numbers,
or other verbal or numerical symbols or indicia, regardless of
the nature of the material objects, such as books, periodicals,
manuscripts, phonorecords, film, tapes, disks, or cards, in
which they are embodied.” 17 U.S.C. § 101. Song lyrics are
copyrightable as a literary work and, therefore, enjoy separate
protection under the Copyright Act. See id. § 102(a)(1)
(extending copyright protection to “literary works”); Zomba
Enters., Inc. v. Panorama Records, Inc., 491 F.3d 574, 578
n.1 (6th Cir. 2007); ABKCO Music, 96 F.3d at 64; 1 Nimmer
on Copyright § 2.05[B] (lyrics “alone are nevertheless copy-
rightable as a literary work”).
LEADSINGER, INC. v. BMG MUSIC PUBLISHING 9
B. Karaoke Devices As “Audiovisual Works”
The district court concluded that Leadsinger would not be
entitled, under any set of facts, to a declaration that a § 115
compulsory license to make and distribute phonorecords
authorizes it to display song lyrics in real time with song
recordings. While our reasoning differs slightly from that of
the district court, we agree with the district court’s conclu-
sion.
The district court reasoned that Leadsinger’s device falls
outside of the definition of phonorecord because the device
contains more than sounds. Leadsinger, Inc. v. BMG Music
Publ’g, 429 F. Supp. 2d 1190, 1194-95 (C.D. Cal. 2005); see
17 U.S.C. § 101 (“Phonorecords are material objects in which
sounds, other than those accompanying a motion picture or
other audiovisual work, are fixed . . . .”). While it is true that
the microchip in Leadsinger’s device stores visual images and
visual representations of lyrics in addition to sounds, the plain
language of the Copyright Act does not expressly preclude a
finding that devices on which sounds and visual images are
fixed fall within the definition of phonorecords. 17 U.S.C.
§ 101. The definition of phonorecords is explicit, however,
that audiovisual works are not phonorecords and are excluded
from § 115’s compulsory licensing scheme. Id. § 101. We
need not settle upon a precise interpretation of § 101’s defini-
tion of phonorecords in this case because Leadsinger’s
karaoke device meets each element of the statutory definition
of audiovisual works and, therefore, cannot be a phonorecord.
[5] As stated above, § 101 of the Copyright Act defines
audiovisual works as works consisting of “a series of related
images” that are “intrinsically intended to be shown by the
use of machines . . . .” First, the visual representation of suc-
cessive portions of song lyrics that Leadsinger’s device pro-
jects onto a television screen constitutes “a series of related
images.”1 Though Leadsinger suggests that its images of song
1
When discussing the images that Leadsinger’s karaoke device projects,
we refer only to the visual representation of song lyrics. While Lead-
10 LEADSINGER, INC. v. BMG MUSIC PUBLISHING
lyrics are not related, the images bear a significant relation-
ship when examined in context. In its complaint, Leadsinger
explained that the purpose of karaoke is for the consumer to
sing the lyrics to a song “in real time” as the song is playing.
To accomplish this purpose, it is necessary that the images of
song lyrics be “presented sequentially” so as to match the
accompanying music and make the lyrics readable. See 1
Nimmer on Copyright § 2.09[B] (“[A] series of slides . . . if
presented sequentially (or in a ‘related sequence’) will consti-
tute an audiovisual work . . . .”).
The fact that the related images are comprised of song lyr-
ics, which constitute a literary work, does not preclude us
from concluding that Leadsinger’s device is an audiovisual
work. The definition of literary works is clear that the catego-
ries of literary works and audiovisual works are not mutually
exclusive. The Copyright Act defines literary works as
“works, other than audiovisual works, expressed in words . . .
regardless of the nature of the material objects, such as . . .
phonorecords, film, tapes, disks, or cards, in which they are
embodied.” 17 U.S.C. § 101. That the definition of literary
works includes the phrase “other than audiovisual works,”
confirms that a literary work may constitute an audiovisual
work if it also fulfills the definition of an audiovisual work.
Second, though § 101 does not require that an audiovisual
work have sound, in the case of Leadsinger’s karaoke device,
its images of successive portions of song lyrics are “intrinsi-
cally intended to be shown by the use of machine . . . together
with accompanying sounds.” Id. § 101. An essential function
of Leadsinger’s device is its ability to indicate to the con-
sumer exactly when to sing each lyric. Leadsinger’s device is
singer’s complaint states that its device sometimes includes licensed
reproductions of still photographs as a background for the onscreen lyrics,
nothing in the complaint indicates that these still photographs could be
characterized as a “series of related images.”
LEADSINGER, INC. v. BMG MUSIC PUBLISHING 11
able to do so only because it utilizes a machine to project the
song lyrics “in real time” with the accompanying music.
In ABKCO Music, the Second Circuit similarly concluded
that the karaoke device in that case was an audiovisual work.
96 F.3d at 65. Though the ABKCO Music court failed to dis-
cuss the importance of a machine to the functioning of the
karaoke device at issue, it held that the device constituted an
audiovisual work, “since [it] ‘consist[s] of a series of related
images’—the lyrics—‘together with accompanying sounds’—
the music.” Id. (quoting 17 U.S.C. § 101).2
To the extent it is requested, Leadsinger also is not entitled
to a declaration that compulsory mechanical licenses under
§ 115 allow it to reprint lyrics in booklets that accompany its
karaoke products. As stated above, lyrics are separately copy-
rightable as literary works. See Zomba Enters., 491 F.3d at578 n.1; ABKCO Music, 96 F.3d at 64. Section 115 covers
only the right to “make and distribute phonorecords.” Though
these phonorecords may include oral renditions of song lyrics,
the reproduction of song lyrics on paper is not within the
2
The only court to hold that a karaoke device is not an audiovisual work
is the District Court for the District of Utah, in EMI Entm’t World, Inc.
v. Priddis Music, Inc., 505 F. Supp. 2d 1217, 1221-22 (D. Utah 2007),
which concluded that synchronization licenses are not necessary to sell a
product that displays lyrics in timed relation with music. In essence, the
EMI Entertainment World court did not view the use of song lyrics for
karaoke as different from the production of printed copies of song lyrics.
Id. We are not persuaded by the court’s reasoning in EMI Entertainment
World. That case failed to consider the use of song lyrics in context. See
WGN Cont’l Broad. Co. v. United Video, Inc., 693 F.2d 622, 628 (7th Cir.
1982) (holding that printed text is part of an audiovisual work when over-
laid on a broadcast news program). The images of song lyrics for the pur-
pose of karaoke differ from song lyrics printed on a sheet of paper. Song
lyrics printed on paper are not a series of images, have no relationship to
a machine, and are not capable of indicating to the consumer when the lyr-
ics are to be sung. On the other hand, images of song lyrics embedded in
a karaoke device are part of a series of images, and must be shown by a
machine so that the consumer knows when to sing each lyric.
12 LEADSINGER, INC. v. BMG MUSIC PUBLISHING
scope of § 115. See ABKCO Music, Inc., 96 F.3d at 64; cf.
EMI Entm’t World, 505 F. Supp. 2d at 1223 (noting that the
defendants had “reprint licenses” entitling them to reprint lyr-
ics of copyrighted songs).
[6] We hold that Leadsinger’s device falls within the defi-
nition of an audiovisual work. As a result, in addition to any
§ 115 compulsory licenses necessary to make and distribute
phonorecords and reprint licenses necessary to reprint song
lyrics, Leadsinger is also required to secure synchronization
licenses to display images of song lyrics in timed relation with
recorded music.
C. Fair Use
Leadsinger argues that regardless of whether its device is
subject to § 115’s compulsory licensing scheme, it is entitled
to publish or display copyrighted song lyrics under the fair
use doctrine. We agree with the district court’s conclusion
that the allegations in Leadsinger’s complaint do not support
a finding of fair use.
[7] The Copyright Act does not grant a copyright holder
exclusive rights to reproduce his or her work. Sony Corp. of
Am. v. Universal City Studios, Inc., 464 U.S. 417, 432-33
(1984). Section 107 of the Copyright Act explains that “the
fair use of a copyrighted work . . . for purposes such as criti-
cism, comment, news reporting, teaching . . . , scholarship, or
research, is not an infringement of copyright.” 17 U.S.C.
§ 107. In determining whether the use of a copyrighted work
is fair, we consider:
(1) the purpose and character of the use, including
whether such use is of a commercial nature or is for
nonprofit educational purposes;
(2) the nature of the copyrighted work;
LEADSINGER, INC. v. BMG MUSIC PUBLISHING 13
(3) the amount and substantiality of the portion
used in relation to the copyrighted work as a whole;
and
(4) the effect of the use upon the potential market
for or value of the copyrighted work.
Id. When conducting a fair use analysis, we are not restricted
to these factors; rather, the analysis is a flexible one that we
perform on a case-by-case basis. Campbell v. Acuff-Rose
Music, Inc., 510 U.S. 569, 577 (1994) (citing Harper & Row
Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560 (1985)).
Moreover, we do not consider these factors in isolation but
weigh them together, in light of the copyright law’s purpose
“to promote the progress of science and art by protecting
artistic and scientific works while encouraging the develop-
ment and evolution of new works.” Mattel, Inc. v. Walking
Mountain Prods., 353 F.3d 792, 799-800 (9th Cir. 2003) (cit-
ing Campbell, 510 U.S. at 575-76).
Fair use is a mixed question of law and fact, Harper & Row
Publishers, 471 U.S. at 560, but it is well established that a
court can resolve the issue of fair use on a motion for sum-
mary judgment when no material facts are in dispute. See
Mattel, 353 F.3d at 800 (citing Harper & Row Publishers,
471 U.S. at 560). The posture of this case is unusual because
the district court decided the fair use issue on a motion to dis-
miss. However, the district court’s resolution of the fair use
issue at the motion to dismiss stage was proper. Leadsinger’s
assertion of fair use may be considered on a motion to dis-
miss, which requires the court to consider all allegations to be
true, in a manner substantially similar to consideration of the
same issue on a motion for summary judgment, when no
material facts are in dispute. We hold that Leadsinger’s alle-
gations, when taken as true, do not support a finding of fair
use.
As a preliminary matter, Leadsinger does not allege that its
display or printing of BMG’s copyrighted song lyrics are for
14 LEADSINGER, INC. v. BMG MUSIC PUBLISHING
the purpose of “criticism, comment, news reporting, teaching
. . . , scholarship, or research . . . .” See 17 U.S.C. § 107.
While Leadsinger argued on appeal that karaoke teaches sing-
ing, that allegation is not set forth in its complaint. Even if the
court could infer that a karaoke device has the potential to
teach singing because the device allows consumers to sing
along with recorded music, it is not reasonable to infer that
teaching is actually the purpose of Leadsinger’s use of the
copyrighted lyrics.
[8] With regard to the first factor under § 107, Leadsinger’s
allegations support only a commercial use. The complaint
does not allege that Leadsinger’s use of copyrighted lyrics is
transformative. See Mattel, 353 F.3d at 800 (explaining that
an analysis of “the purpose and character of use” asks to what
extent the new work transforms, rather than simply supplants,
the original work, and stating that “a work must add ‘some-
thing new, with a further purpose or different character, alter-
ing the first with new expression, meaning, or message’ ”
(quoting Campbell, 510 U.S. at 579)). It is reasonable to infer
that Leadsinger does not add to or alter the copyrighted lyrics,
which would undermine the device’s ability to enable con-
sumers to sing along with the recorded music.
[9] Though Leadsinger alleges that its use of lyrics helps
consumers to understand the song lyrics and that “the words
facilitate parental control over objectionable song words,”
“the ultimate use to which the customer puts [a copyrighted
work] is irrelevant . . . .” L.A. News Serv. v. Tullo, 973 F.2d
791, 797 (9th Cir. 1992); see Harper & Row Publishers, 471
U.S. at 562 (“The crux of the profit/non-profit distinction is
. . . whether the [vendor] stands to profit from exploitation of
the copyrighted material without paying the customary
price.”); Zomba Enters., 491 F.3d at 582-83 (“[T]he end-
user’s utilization of the product is largely irrelevant . . . .”).
Leadsinger’s basic purpose remains a commercial one—to
sell its karaoke device for profit. And commercial use of
copyrighted material is “presumptively an unfair exploitation
LEADSINGER, INC. v. BMG MUSIC PUBLISHING 15
of the monopoly privilege that belongs to the owner of the
copyright.” Sony Corp. of Am., 464 U.S. at 451.
The only other circuit court to address fair use in the con-
text of karaoke reached the same conclusion. In Zomba Enter-
prises, the defendant, a karaoke company, argued that its use
of copyrighted musical compositions was fair. 491 F.3d at
581. The Sixth Circuit held that the defendant’s use of copy-
righted musical compositions did not constitute “fair use.” Id.
at 584. In assessing the first § 107 factor, “the purpose and
character of the use of the work at issue,” the Sixth Circuit
characterized the defendant’s use as “commercial” and
rejected the argument that karaoke is a teaching tool. Id. at
582-83.
[10] The second factor under § 107, “the nature of the
copyrighted work,” also weighs in BMG’s favor. Original
song lyrics are a work of creative expression, as opposed to
an informational work, which is precisely the sort of expres-
sion that the copyright law aims to protect. See Abend v.
MCA, Inc., 863 F.2d 1465, 1481 (9th Cir. 1988) (fictional
short story is “a quintessentially creative product”); see also
Campbell, 510 U.S. at 586 (concluding that musical composi-
tion “Oh, Pretty Woman” fell “within the core of the copy-
right’s protective purposes”); 4 Nimmer on Copyright
§ 13.05[A][2][a] (“[T]he more creative a work, the more pro-
tection it should be accorded from copying; correlatively, the
more informational or functional the plaintiff’s work, the
broader should be the scope of the fair use defense.”)
The third factor, “the amount and substantiality of the por-
tion used in relation to the copyrighted work as a whole,” also
militates against a finding of fair use. See Worldwide Church
of God v. Phila. Church of God, 227 F.3d 1110, 1118 (9th
Cir. 2000) (copying an entire work “militates against a finding
of fair use” (quoting Hustler Magazine, Inc. v. Moral Major-
ity, Inc., 796 F.2d 1148, 1155 (9th Cir. 1986)). Leadsinger
alleges that it has the right to print or display the song lyrics
16 LEADSINGER, INC. v. BMG MUSIC PUBLISHING
to the songs it records, and nothing in the complaint indicates
that Leadsinger uses only a portion of the copyrighted lyrics.
It is, therefore, reasonable to assume that Leadsinger uses
copyrighted lyrics in their entirety.
[11] On appeal, Leadsinger devotes much of its attention to
the fourth factor under § 107, “the effect of use upon the
potential market for or value of the copyrighted work.” The
district court concluded that the allegations in Leadsinger’s
complaint did not permit it to analyze the effect that the sale
of Leadsinger’s device would have on the market. We reach
the same conclusion.
In arguing that its use will not affect the potential market,
Leadsinger contends that there is no market for song lyrics
standing alone. Leadsinger failed to allege this in its com-
plaint and we are not willing to assume that there is no such
market. Leadsinger did allege that music publishers “have
never (or rarely) required a print license” for the use of lyrics
by record companies. But, Leadsinger’s complaint specifies
that this practice is for non-karaoke recordings and that music
publishers have demanded “lyric reprint” fees for karaoke
use. We do not find it reasonable to infer that because copy-
right holders allow record companies to reprint lyrics in con-
junction with non-karaoke recordings, no harm will result
from the reprinting and display of song lyrics in the distinctly
different context of karaoke. Thus, as the district court
observed, Leadsinger has failed to set forth allegations on the
effect of its device on the potential market for or value of the
copyrighted work.
[12] We have, however, concluded that Leadsinger’s use is
intended for commercial gain, and it is well accepted that
when “the intended use is for commercial gain,” the likeli-
hood of market harm “may be presumed.” Sony, 464 U.S. at
451. We have not hesitated to apply this presumption in the
past, see, e.g., Elvis Presley Enters., Inc. v. Passport Video,
349 F.3d 622, 631 (9th Cir. 2003), and we are not reluctant
LEADSINGER, INC. v. BMG MUSIC PUBLISHING 17
to apply it here. Moreover, “the importance of [the market
effect] factor [varies], not only with the amount of harm, but
also with the relative strength of the showing on the other fac-
tors.” See Campbell, 510 U.S. at 591 n.21. The showing on
all other factors under § 107 is strong: the purpose and char-
acter of Leadsinger’s use is commercial; song lyrics fall
within the core of copyright protection; and Leadsinger uses
song lyrics in their entirety. On this basis, we affirm the dis-
trict court’s dismissal of Leadsinger’s request for a declara-
tion based on the fair use doctrine.
D. Denial of Leave to Amend
We review a denial of leave to amend for abuse of discre-
tion. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th Cir.
2002). The Federal Rules of Civil Procedure state that leave
to amend “shall be freely given when justice so requires.”
Fed. R. Civ. P. 15(a)(2). The decision of whether to grant
leave to amend nevertheless remains within the discretion of
the district court, which may deny leave to amend due to
“undue delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by
virtue of allowance of the amendment, [and] futility of
amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962). An
outright refusal to grant leave to amend without a justifying
reason is, however, an abuse of discretion. Id.In this case, the district court specified that its dismissal of
Leadsinger’s complaint was without leave to amend “because
any amendment would be futile.” We have previously
accepted this as a basis upon which a district court may deny
leave to amend. See Steckman v. Hart Brewing, Inc., 143 F.3d
1293, 1298 (9th Cir. 1998) (citation omitted) (stating that the
court need not extend the general rule that parties are allowed
to amend their pleadings if amendment “would be an exercise
in futility”). And we will affirm the district court’s dismissal
on this basis if “it is clear, upon de novo review, that the com-
18 LEADSINGER, INC. v. BMG MUSIC PUBLISHING
plaint could not be saved by any amendment.” See Polich v.
Burlington N., Inc., 942 F.2d 1467, 1472 (9th Cir. 1991).
Based on our de novo review above, the district court’s con-
clusion that Leadsinger’s complaint could not be saved by any
amendment was not an abuse of discretion.
No amendment would change the conclusion that Lead-
singer’s karaoke device falls within the definition of an audio-
visual work and outside the scope of § 115’s compulsory
licensing scheme. Indeed, the conclusion that Leadsinger’s
device displays a series of related images that are intrinsically
intended to be shown by a machine together with accompany-
ing sounds is justified by Leadsinger’s own description of
how its all-in-one microphone allows a consumer to sing lyr-
ics “in real time” with recorded music.
Any amendment relating to Leadsinger’s purported fair use
also would have been futile. Leadsinger’s allegations support
that its use of copyrighted song lyrics is commercial, that
song lyrics fall within the core of copyright protection, and
we have drawn the reasonable inference that Leadsinger uses
song lyrics in their entirety. Thus, the only possible amend-
ment relating to fair use would address the harm to the poten-
tial market for or value of the copyrighted work. That
amendments relating to the fourth § 107 factor are a possibil-
ity is not enough to find that the district court abused its dis-
cretion given that the first three factors under § 107
unequivocally militate against a finding of fair use, and we
are not to consider these factors in isolation. See Campbell,
510 U.S. at 591 n.21.
Moreover, Leadsinger’s action was one for declaratory
judgment. Federal courts do not have a duty to grant declara-
tory judgment; therefore, it is within a district court’s discre-
tion to dismiss an action for declaratory judgment. See Wilton
v. Seven Falls Co., 515 U.S. 277, 288 (1995) (“Consistent
with the nonobligatory nature of the remedy, a district court
is authorized, in the sound exercise of its discretion, to stay
LEADSINGER, INC. v. BMG MUSIC PUBLISHING 19
or to dismiss an action seeking a declaratory judgment before
trial or after all arguments have drawn to a close.”); Gov’t
Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1223 (9th Cir.
1998) (“The [Declaratory Judgment] Act ‘gave the federal
courts competence to make a declaration of rights; it did not
impose a duty to do so.’ ” (quoting Pub. Affairs Assocs., Inc.
v. Rickover, 369 U.S. 111, 112 (1962)). On this basis alone,
the district court was within its discretion to dismiss Lead-
singer’s complaint without leave to amend.
CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s
dismissal of Leadsinger’s complaint without leave to amend.